AZERBAIJAN Law and Practice Contributed by: Parviz Huseynov, GRATA International, Azerbaijan
1. General 1.1 Prevalence of Arbitration
energy sectors remain relatively limited in scope due to their strategic importance and the involvement of a narrower range of market participants, the commercial sector encompasses a substantially broader spectrum of stakeholders and transactions. Consequently, dis - putes arising from commercial relationships are more frequently referred to international arbitration. Furthermore, foreign parties often prefer international arbitration over national courts, largely due to Azerbai - jan’s arbitration-friendly framework for the recognition and enforcement of foreign arbitral awards. 1.3 Arbitration Institutions For cross-border disputes involving Azerbaijani par - ties, the ICC International Court of Arbitration, the London Court of International Arbitration (LCIA), and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) are the arbitral institutions most frequently chosen. The ultimate selection depends on the parties’ agreement and the particular characteris - tics of the underlying transaction. Since foreign arbitral awards are, in principle, enforce - able in Azerbaijan irrespective of the country in which they were rendered, the preference for institutions such as the ICC, LCIA and SCC is driven primarily by commercial and procedural considerations rather than concerns over the enforceability of the resulting award. In this context, it is noteworthy that Azerbaijan has recently witnessed the establishment of its first domestic arbitral institution, the Baku Arbitration Cen - tre. The Centre was registered in 2024 and officially inaugurated in 2025, marking an important milestone in the development of institutional arbitration in Azer - baijan. The establishment of the Centre represents a significant development in the country’s arbitration landscape and reflects the growing interest in arbitra - tion as an alternative dispute resolution mechanism. 1.4 National Courts Under Azerbaijani law, the role of local courts in arbi - tral proceedings primarily concerns the recognition and enforcement of foreign arbitral awards, as well as the exercise of certain supervisory and supportive powers in relation to arbitration proceedings.
Within the Azerbaijani legal system, international arbi - tration has gained increasing practical significance, particularly in disputes arising from cross-border commercial relationships. In practice, international arbitration is predominantly selected in agreements concluded between foreign and domestic parties, whereby the parties agree to submit disputes arising out of or in connection with such agreements to an international arbitral tribunal. The growing significance of international arbitration is also reflected by the increasing number of applications submitted to competent courts for the recognition and enforcement of foreign arbitral awards. One of the key factors contributing to this trend is the comparatively streamlined and predictable framework governing the recognition and enforcement of foreign arbitral awards. Subject to the absence of any grounds for refusing recognition and enforcement, this framework significantly enhances the attractiveness of interna - tional arbitration as a dispute resolution mechanism. By contrast, in contractual relationships involving exclusively domestic parties, disputes are generally referred to the courts of the local jurisdiction rather than to international arbitration. As a result, the resolu - tion of disputes between local counterparties remains predominantly within the competence of the national courts. 1.2 Key Industries In recent years, a notable increase has been observed in the use of international arbitration across a number of sectors. Such growth has been particularly evident in the oil and gas industry, international trade, and the construction of renewable energy projects. In practice, parties frequently incorporate arbitration clauses into production sharing agreements, supply and distribu - tion contracts, as well as engineering, procurement and construction (EPC) contracts relating to wind and solar energy facilities. Among these sectors, the most significant level of arbitral activity can be observed in the field of inter - national trade. While the oil and gas and renewable
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